DEF161203 - No. 5

Armed Forces Pension Proposals don't add up, says Defence Committee

Armed Forces Pension Proposals don't add up, says Defence Committee

Government proposals for new pension and compensation schemes do not do justice to our Armed Forces, according to a report published today by the House of Commons Defence Committee (First Report, Armed Forces Pensions and Compensation, HC 96).

The report examines measures to be introduced on the back of the government's Armed Forces (Pensions and Compensation) Bill. Although the Committee welcomes the modernisation of the schemes and improvements in some key areas, it criticises plans to reduce benefits to personnel, and disputes government claims that the proposals are necessary to curb increased pension costs, caused by increased life expectancy in the forces. The failure to finalise crucial aspects of the schemes, which are due to come into force in 2005, as well as poor communication with affected personnel, are also highlighted in the cross-party report.

Particular criticism is reserved for the government's belief that the new proposals should be 'cost-neutral'. MPs say this has "hamstrung" the review from the outset and will mean that welcome improvements will have to be paid for by benefit cuts elsewhere.

Committee Chairman, Rt Hon Bruce George MP said:

"We're pleased that entitlements for widows and widowers are to be improved and there are new rights for unmarried partners as well. But as the situation stands there will be too few winners and too many losers.

"Most personnel will have to wait an extra five years before receiving their pension and early departure benefits will be of lower value. The overall value of benefits for those who transfer to the new pension schemes will be less than for those who remain on the existing one. Our Armed Forces make a unique contribution to this country and they deserve better than this.

"Details of the new early departure scheme aren't available to MPs or to anyone else, and there are other proposals that need to be clarified. Parliament can't be expected to approve enabling legislation without a clear understanding of its implications for Armed Forces personnel and their dependents. It's very much a case of the devil being in the detail but unfortunately, the detail just isn't there."

Members are also highly concerned about compensation scheme proposals which would see the burden of proof shift from the government to the claimant, making it more difficult for injured personnel to secure compensation, not least because they will have to rely on military records to make their case. While the Committee supports the government's focus on the most severely disabled, the government's "mechanistic" approach towards compensation awards risks producing "Illogical" results, and must also be re-considered, the Committee says.

The Committee also asks the government to find solutions to a series of legacy issues. In particular, it urges the government to compensate properly and swiftly the more than 1,000 mostly very elderly veterans whose pensions have been improperly taxed.

Other recommendations include:

Compensation payments should be based on a proper assessment of earning capacity in civilian life for each individual.

The Ministry of Defence should issue information to all serving personnel to enable them to make an informed choice, including pensions forecasts tailored to individual personnel.

The MoD should consult with existing Armed Forces personnel on raising the preserved pension age to 65.

New schemes and major changes to them should be explicitly approved by Parliament, following consultation. There is a strong case for setting out the basic principles of the schemes in primary legislation.

NOTES TO EDITORS:

1.Confidential advance copies of the Report will be available to witnesses and accredited members of the press from 11am on Monday 15 December in the Press Gallery of the House of Commons, and from the Defence Committee office.

2.The Committee published a report on the MoD reviews of Armed Forces Pension and Compensation arrangements in May 2002. (Published as the Third Report from the Defence Committee, Session 2001-02, HC 666 - available online at http://www.parliament.the-stationery-office.co.uk/pa/cm200102/cmselect/cmdfence/666/66602.htm) The Government's reply to this report was published in July 2002. (Published as the Fifth Special Report from the Defence Committee, Session 2001-02, HC 1115 - available online at http://www.parliament.the-stationery-office.co.uk/pa/cm200102/cmselect/cmdfence/1115/111502.htm)

3.Evidence taken before the Committee in December 2002 from the previous Minister for Veterans, Dr Lewis Moonie MP, has been published as HC (2002-03) 188-i. It is available online at http://www.parliament.the-stationery-office.co.uk/pa/cm200203/cmselect/cmdfence/188/2121801.htm